The past couple of years have been anything but normal.  Actually, the last ten to fifteen years have been a roller coaster ride for stock investors.  You had the run-up in the late 90’s mostly due to the tech boom, only to be followed by a two plus year correction.  You then had another run-up from 2003 through late-2007 which was spurred on by low interest rates (which also helped lead the housing boom).  That was followed by, well, you know……

Most studies show that the returns for the average retail investor trail index returns by a significant margin (mostly attributed to emotional decision making). So when we hear the statistics that tell us money markets have outperformed the S&P 500 over the last ten years, and treasury bonds have outperformed the S&P 500 over the last twenty years, most people would have chosen “boring” over equities, if they could do it all over again.  Even corporate bonds have only trailed equities by 40bps (.40% annually) over twenty years.  And that is with much less volatility and risk.

The two paragraphs above may seem like we are trying to make an argument for not investing in equities--not so.  We believe taking a broad asset allocation and sector diversification approach to equities fits nicely within a balanced portfolio.  That being said, we also believe the general public has put too much stock (pun intended) into equities as the only vehicle for growth.

We don’t mind being a broken record.  We like the song “Allocation with and Emphasis on Yield.”  Proper allocation, including tactical sector weightings, along with fixed-income and non-correlated alternatives are key to a successful retirement portfolio.

This type of portfolio might be boring and may put you to sleep, but at least you will sleep.  Life needs to be exciting, not your investment portfolio.  Let the era of boring begin!